I see three factors operating at the moment:
One. Can’t qualify for a mortgage/bad credit.
If you don’t have a job, or any money in the bank, you’re not going to get a loan.
At least not one from a bank.
Sadly, a couple years of grinding recession has pushed more people into this category.
Two. Can’t sell what they have.
You’ve got a job and some savings (Yeah!).
But you’ve also a got a house that you can’t sell, or that may be underwater — meaning you owe more than it’s worth (Drat!).
Ultimately, to a Realtor, this is just another, less dire variation of Factor #1.
Three. Worried about home prices falling further.
I can’t prove it, but I think this is the real bugaboo for Buyers at the moment.
Interest rates are in the basement, courtesy of the Fed; unemployment is apparently stabilizing (albeit at very high levels historically); and home prices have already taken a major whack almost everywhere — meaning that payments for a decent home have seldom been this low.
Lastly, signs of inflation — historically a positive for hard assets like housing — are becoming manifest in all manner of commodities and stocks lately.
Everywhere, apparently, except the housing market.
Which means that many Buyers evince an attitude of, “my choices will be better and cheaper if I wait.”
Unfortunately, there’s only one, 100% guaranteed cure for that: a year or two of sustained gains in housing prices.
If enough people wait for that to happen . . . current Buying demand suffers, and lower prices become a self-fulfilling prophecy.
Always a smart idea to disable the brakes before you hit the gas . . .
Next: “Defensive Housing Plays”